65% of Canada’s ‘Clean Energy’ Fund Goes to Tar Sands Greenwashing

Canada's Conservative government is funneling two-thirds of its $860 million "clean energy" fund into carbon capture and storage (CCS) technology. Most of that $580 million is headed to Alberta to clean up the province's dirty tar sands operations, which emit more global warming gases than the entire nation of New Zealand.

If it sounds like hogwash, or rather greenwash, it is.

The tarry bitumen of the oil sands is one of the world's filthiest hydrocarbons. Mining it produces two to six times more greenhouse gases than light oil.

In theory, CCS, or so-called "clean coal," could strip carbon from exhaust gases, pipe it away and bury it in depleted oil and gas reservoirs elsewhere in Alberta. But that doesn't hold up in practice, and there's no evidence that it ever will.

For one, CCS technology is largely unproven. Experts say it's at least two decades from commercialization, if it materializes at all.

Two, CCS is really geared to retrofitting coal-fired plants and expanding the economic life of coal. It will not be as effective on most tar sands steam plants, according to Andrew Nikiforuk, author of Tar Sands: Dirty Oil and the Future of a Continent.

And three, and perhaps most importantly, CCS could not be done cheaply enough for bitumen production to remain economically viable.

Prime Minister Stephen Harper is delusional if he believes that capturing carbon dioxide from coal plants and oil-sands operations and storing it underground is going to have a material impact on reducing greenhouse-gases over the next decade, let alone the next two decades. Not because the technology doesn't work or isn't safe, which is still up for debate, but because it's too expensive and risky to deploy on the scale that's required.

Truth is, Harper's not delusional at all.

He's just greenwashing, which according to Wikipedia occurs when "significantly more money or time has been spent advertising being green."

Attempting to "green" the tar sands with CCS, or any other fix, would be impossibly expensive (impossible being the key word.) So finds a new report by the Canadian Energy Research Institute (CERI).

After 18 months of research, CERI concluded that a a carbon price tag of at least $65 per ton would be needed to get emissions output of bitumen below conventional oil. Below that amount not much CO2 will ever get buried.

But that kind of carbon penalty is simply not on the table. It would add around $4 per barrel to the industry's production costs, which are already the most expensive in the world.

Further, crude would have to climb to as high as $105 a barrel to offset the costs of developing and deploying CCS and other emissions-scrubbing technologies.

All of which means: The business case for cleaner bitumen is bad.

Harper knows this. He also knows the tar sands are a mounting liability as Alberta's reputation as an environmental wasteland spreads planetwide. The solution? Dish out just enough CCS cash to create an impression of environmental action, and hope the finance spigot opens up again. (Note: The Alberta government had previously pased a $2 billion CCS scheme.)

It's the post-boom era for the oil sands. More than $20 billion in projects were either shelved or canceled this year due to the collapse in oil prices and economic meltdown. But the industry has hardly gone bust.

In fact, the Globe and Mail recently declared that "the oil patch is striking back." Now that labor and material costs and falling, it predicts that some of those delayed projects could be back on the table by year's end.

Further, a study released last week by the Cambridge Energy Research Associates (CERA) forecast that Canada's oil sands could rise to as much as 6.3 million barrels a day by 2035, assuming strong economic growth and higher oil prices in the long term. That's a fivefold increase above current levels.

"The oilsands have moved from the fringe of energy supply to the centre. They are now one of the major resources in the world with potential for very substantial expansion," said Daniel Yergin, chairman of CERA.

Interestingly, America's potential future climate law, the American Clean Energy and Security Act, could have helped to stymie such "substantial expansion." Originally the bill had a low carbon fuel standard that could have curbed use of the dirty fuel. But that's been cut. Several states are in discussions to pass their own, though. And depending on what becomes of the bill, Canada might have to buy allowances to make up for the higher carbon content in its bitumen.

This would be good news. But let's be clear: Nothing – neither a cap on emissions nor CCS – could decontaminate those dirty tar sands.

Just yesterday, Harper called its environmental calamity "critical" to Canada's economy. Clearly the tar sands are here to stay. At the very least their profits could help to "fund Canada's transition to a low-carbon economy government," argues Nikiforuk in his book. Instead the government

has surrendered the fate of the resource to irrational global demands. At forecast rates of production, the richest deposits of bitumen will be exhausted in forty years.

Tellingly, Canada's actual clean energy commitment from its "clean energy" fund is a piddly $175 million for smaller-scale renewables projects and alternatively energy projects, such as biofuels. The rest, about $130 million, will be spent on cleantech research. All of which will be paid out over five years.

Governments around the world are deciding right now what their future energy mix will be. Canada's pick is in: The tar sands will be its no. 1 dirty – and clean – energy priority.